Client company exceeded VAT threshold in draft accounts of 2018, but unresponsive director has failed to respond to us or VAT register. Until today, that is, because Companies House are now threatening prosecution.
In the light of which, would it be technically correct if we were to file at Cos House our draft FRS105 accounts containing gross figures? Until such time as the client registers for VAT, whereupon those gross accounts could be replaced by net of VAT accounts? If such course of action is correct and legal, then that would avoid any potential charge of our having delayed submission and thereby caused Companies House to proceed with its prosecution.
The alternatives are:
(i) File net of VAT accounts in anticipation of the client's impending VAT registration. I'm uncomfortable with that, not least because I'm not convinced the director will ever register; also because input VAT is impossible to quantify at this stage; and, finally, I would much prefer to overstate rather than understate profits.
(ii) Do nothing, but be laid open to a possible charge from the client of having failed to halt proceedings by lodging accounts (albeit containing gross figures) at Companies House.
So there it is. Would filing the draft FRS105 accounts, which contain gross figures, at Cos House be technically correct for the time being?